Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 111017 August 31, 1995

BLISS DEVELOPMENT CORPORATION, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, TERESITA LEJANO and RODOLFO
ANGELES, respondents.

KAPUNAN, J.:

This petition for certiorari under Rule 65 of the Revised Rules of Court assails the decision dated 11 May 1993 of
the National Labor Relations Commission, Second Division, NCR, in NLRC NCR Case No. 00-01-00652-89
dismissing private respondents' final motion for execution for lack of merit and NLRC resolution dated 18 June
1993 denying the motion for reconsideration filed by private respondents.

Private respondent Teresita Lejano was employed by petitioner Bliss Development Corporation (BDC) as Head of
the Accounting Task Force while private respondent Rodolfo Angeles was the Acting Division Chief of the Systems
Department Finance Group.1

On 6 February 1987, petitioner terminated private respondents on grounds of loss of trust and confidence. 2

On 31 January 1989, private respondents filed a complaint for illegal dismissal with the NLRC. 3

On 16 August 1987, a Decision was issued by Labor Arbiter Nieves Vivar de Castro, the dispositive portion of
which reads as follows:

WHEREFORE, respondent is hereby directed to reinstate complainants to their position former without
loss of seniority rights immediately upon receipt hereof and with full backwages from February 6, 1987 to
actual reinstatement. To wit:

RODOLFO ANGELES:

P 4,708.80 salary/month
x 29 months or up to July 4, 1989
—————
P 136,555.20

TERESITA LEJANO:

P 7,604.00 annual salary

x 2 yrs. up to February 4, 1989
—————
P 15,208.00
 + 3,168.30 5 months salary at P633.66/mo
—————
P 18,376.30

otherwise, a writ of execution shall issue.4

On 14 September 1989, private respondents filed an Urgent Motion to Correct/Modify Decision/Order of 16 August
1989 and the same was treated as an appeal by the Labor Arbiter. On 18 September 1989, petitioner appealed the
aforesaid Decision to the NLRC.5

On 17 April 1990, the NLRC dismissed petitioner's appeal for failure to post the required bond. Petitioner's petition
for certiorari with the Supreme Court was likewise dismissed on 17 June 1991.6

On 03 July 1991, private respondents filed an Urgent Motion for Execution of Judgment which was opposed by
petitioner on 13 August 1991.7

On 28 August 1991, private respondents filed a Joint Manifestation together with their computation of entitlements
(pp. 272-280, Records). However, during the bearing on 17 October 1991 petitioner's counsel failed to appear.
Hence, the Labor Arbiter approved the submitted monetary benefits/entitlements of private respondents and on 29
October 1991, she issued a Writ of Execution ordering payment of private respondents computed monetary benefits
amounting to P1,174,814.28, broken down as follows:

Teresita Z. Lejano

1. Unpaid salary prior to termination P1,625.73

2. Salary, allowances and other benefits February 6, 1987 — August 31, 1991 (transportation allowance,
cash gift, economic assistance, medical benefit, uniform allowance, SSS/Medicare Employer's Share, Pag-
ibig Employer's Share, 13th month pay, cash equivalent of vacation and sick leave) 652,312.68

3. Attorney's fees 10% 65,312.68

——————
Total P 719,169.68

Rodolfo Angeles

1. Unpaid salary prior to termination P 983.72

2. SalaryallowancesandotherbenefitsFebruary 6, 1987 — August 31, 1991 (transportation and

representation allowance, cash gift, economic assistance, medical benefit, uniform allowance,
SSS/Medicare Employer's Share, Pag-ibig Employer's Share, 13th month pay, cash equivalent of vacation
and sick leave) 414,716.58

3. Attorney's fees 10% 41,570.03

——————
Total P 457,270.338

On 06 June 1992, private respondents filed a Final Motion for Execution claiming entitlements representing their
salaries, allowances and other benefits from 01 September 1991 to 31 May 1992 and separation benefits computed
up to 31 May 1992, in lieu of reinstatement amounting to P612,618.06 for Teresita Lejano and P506,228.18 for
Rodolfo Angeles, in view of petitioner's dissolution on 30 June 1992 pursuant to E.O. No. 90.9

On 15 September 1992, petitioner filed its opposition/comment on the Final Motion for Execution.
On 22 October 1992, the Labor Arbiter issued an Order granting the final motion for execution of private
respondents and ordering additional payments to them in the amounts of P668,230.33 for Teresita Z. Lejano and
P551,772.99 for Rodolfo Angeles.10

On appeal to the NLRC, petitioner contends that the Labor Arbiter, in its decision dated 16 August 1989 ordered
reinstatement and full backwages, nothing more. There was specifically no award for attorney's fees.

On 11 May 1993, the NLRC set aside the Order of the Labor Arbiter dated 22 October 1992 and dismissed private
respondents' final motion for execution. The dispositive portion reads as follows:

WHEREFORE, the Order of the Labor Arbiter dated 22 October 1992 is hereby, SET ASIDE and a new
Order is hereby promulgated DISMISSING complainants' Final Motion for Execution for lack of merit.

Accordingly, this case is hereby considered closed and terminated.

SO ORDERED.11

In its assailed decision, the NLRC ruled that the computation of private respondents' backwages should be confined
only to basic salary at the time of dismissal including regular allowance and thirteenth-month pay only and that the
same should not exceed the three-year period.12

Hence, the instant petition for certiorari.

The sole issue presented by petitioner is whether or not public respondent NLRC gravely abused its discretion in not
incorporating in its decision of May 11, 1993, an order directing private respondents to refund the excess payment
they received from petitioner despite a clear finding in said Decision that there were indeed such excess payments. 13

Petitioner argues that:

(1) the backwages awarded to private respondents should not have exceeded the 3 year-period as mandated by the
Mercury Drug Rule; and

(2) the 3-year rule on backwages applies to final and executory judgments, hence, the NLRC should order private
respondents to return the excess amount they received.14

We find the petition meritorious.

Private respondents, as verily ruled by the NLRC, are entitled only to three (3) years backwages. The amendatory
provision in R.A. No. 671515 consequently allowing illegally dismissed employees to be awarded their full
backwages took effect on March 21, 1989 or two (2) years after private respondents were terminated on February 6,
1987. We have consistently ruled that said amendment has no retroactive effect and therefore, does not apply.
In Arms Taxi v. NLRC,16 we put it thus:

The full backwages claimed by Culla and provided in Section 34 of Republic Act No. 6715, which took
effect on March 21, 1989, cannot be granted to him for his summary dismissal occurred on June 11, 1986,
three (3) years before R.A. 6715 took effect. The new law may not be applied retroactively (Sealand
Service, Inc., vs. NLRC, 190 SCRA 347; Lantion vs. NLRC, 181 SCRA 513).

In the case at bench, the policy of awarding illegally dismissed employees' backwages limited to three (3) years,
without qualification or deduction, otherwise known as the Mercury Drug Rule,17 would thus prevail.
We find untenable private respondents' contention that since the decision of the Labor Arbiter has become final and
executory and was in fact partially executed, it can no longer be disturbed or modified. We adhere to our ruling
in Sealand Service, Inc. v. NLRC,18 thus:

We have constantly adopted the policy of awarding backwages to illegally dismissed employees to three
years without qualification or deduction. This policy applies even to final decisions awarding backwages in
excess of three years.

As we ruled in Mansalay Catholic High School vs. National Labor Relations Commission, et al.:

. . . Even if the decision of the NLRC that was being enforced through execution has
become final and executory, the same should be interpreted and implemented in that in
cases of illegal dismissal, the backwages that the employee should be entitled to should
be for a period of not exceeding three (3) years. The excuse of the NLRC that the
decision has become final and executory and cannot be modified is puerile. Such decision
is subject to this rule. Any decision or order granting backwages in excess is null and
void as to the excess. A departure therefrom constitutes a grave abuse of discretion.

Hence, in the case at bar, the open-ended duration prescribed in the decision sought to be enforced by the
questioned resolution should be subject to said limitation and the award of backwages should, therefore be
limited to three (3) years without qualification or deduction. The computation of the award made by the
labor arbiter in excess of this limit is null and void and the writ of execution issued pursuant thereto should
be set aside.

Likewise, we find no justification for the award of attorney's fees. The decision of the Labor Arbiter dated 16
August 1989, on which the writs of execution dated 29 October 1991 and 22 October 1992 of the labor arbiter were
based, was limited to the reinstatement of private respondents and payment of their backwages. Attorney's fees were
not awarded. Private respondents contended that they have "successfully appealed the award of attorney's
fees"19 through the urgent motion to correct/modify decision of 16 August 1989 which they filed on 14 September
1989. However, the record is bereft of any evidence to show that their motion was granted or particularly, that
attorney's fees were granted to them. It is a long standing rule that:

When the writ of execution is not in harmony with and exceeds the judgment which gives it life, the writ
has pro tanto no validity . . .20

The execution of judgment must conform to that which is ordained and decreed in the dispositive portion of
the decision. Where the writ runs counter to, differs from or exceeds the specific provisions in the judgment
the same is issued without or in excess of jurisdiction.21

The NLRC is vested with authority to look into the correctness of the execution of the decision and to consider
supervening events that may affect such execution.22 In it assailed decision, the NLRC declared that:

After an examination of the subject computation, We cannot help but declare a finding of patent departure
from applicable jurisprudence on the computation of backwages by complainants and the Labor Arbiter a
quo considering that the computation covers a period of four years and six months more or less and it
included items not covered by the term backwages as well as an award of 10% attorney's fees which was
not included in the Decision of the Labor Arbiter dated 16 August 1989.23

xxx xxx xxx

Likewise, complainants' backwages should not exceed the three (3) year period and this applies even to
final and executory judgment . . .
 xxx xxx xxx

As regards the claim of respondents that the Writ of Execution included benefits not awarded in the
decision of the Labor Arbiter dated August 16, 1989, the Supreme Court in a number of cases ruled as
follows:

Where the execution is not in harmony with the exceeds the judgment that gives it life,
the writ has no authority. (Christian Literature Crusade vs. NLRC, 171 SCRA 712).

Execution must conform with the dispositive portion of the decision. (Paylago vs.
Nicolas, 189 SCRA 722).

xxx xxx xxx

Despite such pronouncements, however, the NLRC failed to rectify the writ of execution previously issued by the
Labor Arbiter. The NLRC should have proceeded to modify or make a recomputation of the monetary award to
conform with its ruling as aforequoted. Clearly, the NLRC has been remiss in its duty.

We cannot uphold the NLRC's decision not to disturb the computation of backwages awarded to private respondents
on the basis of petitioner's voluntary admission of liability. The NLRC opined:

On the other hand, respondent submitted their own computation of the amount due herein complainants
wherein they admitted their liabilities to them in the amount of P443,733.98 for Teresita Lejano and
P300,952.39 representing three (3) years backwages, 13th month pay, economic or educational assistance,
clothing allowance, transportation allowance, vacation leave, cash allowance/incentive pay and
retrenchment package. Although the said computation (pp. 412-415, Records) includes benefits not covered
by the term wages as defined in the aforequoted decision of the Supreme Court in the case of Paramount
Vinyl Products vs. NLRC, Ibid.) since the same is voluntarily admitted by respondents to be due
complainants, we will no longer disturb the same, except as to the computation on separation pay, which
we will discuss in the latter part of this decision. (Emphasis ours.)

Now, as to the questioned Order of the Labor Arbiter a quo dated 22 October 1992, allowing an additional
and uninterrupted backwages/ monetary benefits to complainants-appellees, We find the same to be
contrary to the jurisprudence aforequoted and should be set aside.

The issue of reinstatement in the instant case has become moot and academic considering the respondent's
dissolution on 30 June 1992. Thus, We find the award of separation pay proper in lieu of actual
reinstatement of complainants. In the cases of Asphalt & Cement Pavers, Inc. vs. Vicente Leogardo,
Jr., and Valentin Torillo vs. Vicente Leogardo, Jr., et al., G.R. No. 77205, the Supreme Court held that "an
illegally dismissed employee is entitled to reinstatement to his previous position without loss of seniority
rights and backwages for a period of three (3) years without qualification and deduction (Mercury Drug
Rule). If reinstatement is no longer feasible, the employer may be ordered to pay in addition to backwages,
separation pay as provided by law."

We find the amount of P123,578.00 (P7,604.80 x 1.25 x 13 years) due to complainant Teresita Lejano, as
her separation pay, while the amount of P76,518.00 (P4,708.80 x 1.25 x 13 years) due to complainant
Rodolfo Angeles as his separation pay (Annex "2", Retrenchment Program of BDC Employees, pp. 408-
410, Records).

However, there is no need to order respondent BDC to pay complainants their aforestated separation pay
considering that the aforestated amounts have already been covered in the total amount of P1,174,814 .28
received by them as above-discussed. (Emphasis ours)
At most, the NLRC could have simply taken such admission in consideration in recomputing the monetary award
due to private respondents. There should be harmony in all aspects of the decision. To rule otherwise would be
tantamount to injustice.

WHEREFORE, the questioned decision of the NLRC is AFFIRMED subject to the modification that:

1) the backwages awarded should be limited to three (3) years only, without qualification or deduction and the
excess, if any, shall be refunded to petitioner; and

2) petitioner is hereby ordered to pay separation pay in the amount of P123,578.00 for private respondent Teresita
Lejano and P76,518.00 for private respondent Rodolfo Angeles, in lieu of reinstatement due to the dissolution of
petitioner corporation on 30 June 1992.

SO ORDERED.

Padilla, Davide, Jr., Bellosillo and Hermosisima, Jr., JJ., concur.